Investigating heterogeneity in European fiscal behaviours
The aim of this paper is to analyse the heterogeneity in fiscal behaviours in the euro zone. The fiscal behaviours are analysed according to a new specification in which the cyclically adjusted primary balance reacts to the change in the output gap, the public debt ratio, the inflation rate and the interest rate. Our study covers 12 countries in the euro zone during 1999–2010 using annual data from the AMECO database. We use the quantile regression methodology to test the fiscal rule. Our findings show the persistence in fiscal behaviour and counter‐cyclical fiscal policy. The results also show that fiscal responses differ according to the chosen quantile. In particular, a high fiscal indicator is associated with a debt‐stabilisation motive and concern about inflation. A shock analysis indicates how the fiscal dispersion could be changed according to the nature of the shock. The results of this paper are useful for understanding fiscal coordination and for improving the European fiscal framework.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Pierpaolo Benigno & Michael Woodford, 2004.
"Optimal Monetary and Fiscal Policy: A Linear-Quadratic Approach,"
in: NBER Macroeconomics Annual 2003, Volume 18, pages 271-364
National Bureau of Economic Research, Inc.
- Pierpaolo Benigno & Michael Woodford, 2003. "Optimal monetary and fiscal policy: a linear-quadratic approach," Proceedings, Board of Governors of the Federal Reserve System (U.S.).
- Benigno, Pierpaolo & Woodford, Michael, 2004. "Optimal monetary and fiscal policy: a linear-quadratic approach," Working Paper Series 0345, European Central Bank.
- Pierpaolo Benigno & Michael Woodford, 2003. "Optimal Monetary and Fiscal Policy: A Linear Quadratic Approach," NBER Working Papers 9905, National Bureau of Economic Research, Inc.
- Pierpaolo Benigno & Michael Woodford, 2004. "Optimal monetary and fiscal policy: a linear-quadratic approach," International Finance Discussion Papers 806, Board of Governors of the Federal Reserve System (U.S.).
- Hughes Hallett, Andrew & Weymark, Diana, 2002.
"The Cost of Heterogeneity in a Monetary Union,"
CEPR Discussion Papers
3223, C.E.P.R. Discussion Papers.
- Andrew Hughes Hallett & Diana N. Weymark, 2001. "The Cost of Heterogeneity in a Monetary Union," Vanderbilt University Department of Economics Working Papers 0128, Vanderbilt University Department of Economics.
- F. Ballabriga & C. Martinez-Mongay, 2002. "Has EMU shifted policy?," European Economy - Economic Papers 2008 - 2015 166, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
- Woodford, Michael, 2001.
"Fiscal Requirements for Price Stability,"
Journal of Money, Credit and Banking,
Blackwell Publishing, vol. 33(3), pages 669-728, August.
- Davide Furceri, 2009.
"Fiscal Convergence, Business Cycle Volatility and Growth,"
OECD Economics Department Working Papers
674, OECD Publishing.
- Davide Furceri, 2009. "Fiscal Convergence, Business Cycle Volatility, and Growth," Review of International Economics, Wiley Blackwell, vol. 17(3), pages 615-630, 08.
- Jordi Gali & Roberto Perotti, 2003.
"Fiscal Policy and Monetary Integration in Europe,"
NBER Working Papers
9773, National Bureau of Economic Research, Inc.
- Koenker, Roger W & Bassett, Gilbert, Jr, 1978. "Regression Quantiles," Econometrica, Econometric Society, vol. 46(1), pages 33-50, January.
- Forni, Lorenzo & Momigliano, Sandro, 2004.
"Cyclical sensitivity of fiscal policies based on real-time data,"
4315, University Library of Munich, Germany.
- Lorenzo Forni & Sandro Momigliano, 2004. "Cyclical sensitivity of fiscal policies based on real-time data," Temi di discussione (Economic working papers) 540, Bank of Italy, Economic Research and International Relations Area.
- Peter Claeys, 2006.
"Policy mix and debt sustainability: evidence from fiscal policy rules,"
Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 33(2), pages 89-112, June.
- Peter Claeys, 2005. "Policy mix and debt sustainability: evidence from fiscal policy rules," Economics Working Papers ECO2005/01, European University Institute.
- Peter Claeys, 2005. "Policy Mix and Debt Sustainability: Evidence from Fiscal Policy Rules," CESifo Working Paper Series 1406, CESifo Group Munich.
- Dufrénot, G. & Frouté, P. & Schalck, C., 2010. "The French Regions’ Borrowing Behaviours. How heterogeneous are they?," Working papers 289, Banque de France.
- Onorante, Luca, 2006.
"Fiscal convergence before entering the EMU,"
Working Paper Series
0664, European Central Bank.
- Jordi GalÌ & Roberto Perotti, 2003. "Fiscal policy and monetary integration in Europe," Economic Policy, CEPR;CES;MSH, vol. 18(37), pages 533-572, October.
- Philip R. Lane, 2002.
"The Cyclical Behaviour of Fiscal Policy: Evidence from the OECD,"
Trinity Economics Papers
20022, Trinity College Dublin, Department of Economics.
- Lane, Philip R., 2003. "The cyclical behaviour of fiscal policy: evidence from the OECD," Journal of Public Economics, Elsevier, vol. 87(12), pages 2661-2675, December.
- Roger Koenker & Kevin F. Hallock, 2001.
Journal of Economic Perspectives,
American Economic Association, vol. 15(4), pages 143-156, Fall.
- JÃ©rÃ´me Creel & Paola Monperrus-Veroni & Francesco Saraceno, 2009. "Fiscal policy is back in France and the United Kingdom!," Journal of Post Keynesian Economics, M.E. Sharpe, Inc., vol. 31(4), pages 645-667, July.
- Florence Huart, 2011. "Has fiscal discretion during good times and bad times changed in the euro area countries?," Economics Bulletin, AccessEcon, vol. 31(1), pages 404-415.
- Kocenda, Evzen & Kutan, Ali M. & Yigit, Taner M., 2008. "Fiscal convergence in the European Union," The North American Journal of Economics and Finance, Elsevier, vol. 19(3), pages 319-330, December.
- Newey, Whitney K & Powell, James L, 1987. "Asymmetric Least Squares Estimation and Testing," Econometrica, Econometric Society, vol. 55(4), pages 819-47, July.
- Pereira Manuel Coutinho & Lopes Artur Silva, 2014.
"Time-varying fiscal policy in the US,"
Studies in Nonlinear Dynamics & Econometrics,
De Gruyter, vol. 18(2), pages 28, April.
- Manuel Coutinho Pereira & Artur Silva Lopes, 2010. "Time varying fiscal policy in the U.S," CEMAPRE Working Papers 1004, Centre for Applied Mathematics and Economics (CEMAPRE), School of Economics and Management (ISEG), Technical University of Lisbon.
- Manuel Coutinho Pereira & Artur Silva Lopes, 2010. "Time-varying fiscal policy in the U.S," Working Papers w201021, Banco de Portugal, Economics and Research Department.
- De Bandt, Olivier & Mongelli, Francesco Paolo, 2000. "Convergence of fiscal policies in the euro area," Working Paper Series 0020, European Central Bank.
- Charles Wyplosz, 2006. "European Monetary Union: the dark sides of a major success," Economic Policy, CEPR;CES;MSH, vol. 21(46), pages 207-261, 04.
When requesting a correction, please mention this item's handle: RePEc:eee:reecon:v:66:y:2012:i:4:p:383-390. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Shamier, Wendy)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.